I am concerned about the decline in self employment and have been an opponent of the IR 35 tax treatments as amended in 2017 and 2021. I have asked what impact there has been. The figures they refer to did not seem to enlighten the issue. I have seen other figures suggesting there has been a fall of 700,000 to 4.3m in theĀ number self employed since 2020. I accept covid lockdowns will have had an impact on numbers,Ā but this also includes a period of tightening of rules to discourage self employed status. It is worrying, yet the Treasury says some of these people are still doing the same jobs under different tax arrangements. It would be good to have more informed data and analysisĀ as expanding self employment is an important part of building a flexible and faster growing economy.Ā
Treasury has provided the following answer to your written parliamentary question (92045):
Question:
To ask the Chancellor of the Exchequer, how many people have ceased to be self-employed since the introduction of the 2021 IR 35 rules. (92045)
Tabled on: 21 November 2022
Answer:
Victoria Atkins:
It is an anticipated outcome of the 2021 off-payroll working (IR35) reform that organisations and contractors will consider the best way for contractors to provide their services, while being compliant with tax legislation.
The Office for National Statistics (ONS) publish data on trends in employment. Dataset A02 NSA provides quarterly estimates of the number of self-employed individuals over the age of 16 for the period sought. On 6 September ONS officials gave evidence to the House of Lords Economic Affairs Committee on changes in the number of individuals self-reporting as self-employed during the relevant period as a part of the committeeās UK Labour Supply Inquiry. That evidence stated that some part of the change in individuals self-reporting as self-employed is due to changes in how people classify themselves, without having changed the way they work.
The answer was submitted on 29 Nov 2022 at 07:58.
December 8, 2022
In light of the fall in numbers (why cannot Ms. Atkins state a number when plainly asked for one?) and given “expanding self employment is an important part of building a flexible and faster growing economy”, would it not be proper to suspend IR35 in total for a few years at least?
Recall Chancellor Sunak splurged billions on Covid grants to the many, including fraudsters, that H.M. Treasury cannot recover so there can hardly be objection now to risking collecting less through IR35 measures being dispensed with for a while.
We still seek a government that is on the side of the people, do we not!
December 8, 2022
Absolutely correct, f57. The ‘answer’ reads like a complete brush-off in response to a respected colleague.
December 8, 2022
I don’t know why Sir John is so bothered about people who were previously forced to pretend to be self-employed – for the benefit of an exploitative de facto employer’s avoiding his responsibilities – deciding that they’d had enough, do you?
December 8, 2022
It isn’t just tax which prevents new business it is more likely to be the incredible competition and effort required when people are getting less for their money. So many small businesses fail. If I go into one of the many small bars in my locality they tell me of the competition which is often dirty competition, The small business person who is contracted cannot make out on his/her own even though they have the skills as the bigger business will take the credit and the extra money.
December 8, 2022
The system created by generations of MPs is now fertilizing the Black Economy. I predict that it will continue to grow until tax legislation is reformed to render it and overseas accounting unnecessary. But for government greed, all that energy devoted to avoiding tax could be chanelled into creating wealth at every level.
December 8, 2022
Perhaps the better question: What lies would the govt. like to offer for destroying small business through self-employment to align with EU corporatism?
Victoria Atkinson.. a minister! Good grief another quota appointment?
December 8, 2022
Good morning.
I am not too sure what this means ? I can only assume that it means people have decided to go on the company payroll.
1 have long believed that IR35 is a tool used to destroy competition by SMEās. At first I believe the guff about people trying to avoid the tax system but, with evermore tightening rules and the revelation that large corporates have used the EU as a means to regulate out the competition I am not surprised if this is the case.
The government certainly put more effort in trying to stop people from running a business then they do those entering my country illegally.
December 8, 2022
You are not intended to know what it means, as I said in my principal comment it is Sir Humpfrey saying Foxtrot Oscar.
December 8, 2022
+10
December 8, 2022
IR35 targetted the wrong people. It was originally intended to prevent companies from dodging NI, holiday, sick pay, trainings costs, but hiring freelancers. The powerful lobbies prevented it and transferred the liability to the freelancers. However, with SELF EMPLOYED people, the liability remained with the hirer which is why they were forced (yes, FORCED) by the hirers to become companies, ie. personal service companies in order to ensure the liabilities were passed to the freelancers, who now suffer IR35 and all the associated costs mentioned above, plus the cost of running a company. The only alternative is an umbrella company which charges high fees, but saves the hassle of running a company. I know many fairly low paid freelancers would much prefer employment but the hirer has a ‘take it or leave it’ approach.
December 9, 2022
No, IR35 was created because a one-man company could contract to supply his services from nine-to-five, five days a week, to the one client for six months, pay himself a nominal tax-efficient PAYE salary as company director, and then use dividend payments to the company shareholders, say him and a spouse, to obtain the rest of the company’s profit a couple of times a year as Corporation Tax was more tax efficient than using PAYE for everything and the dividend came ready ‘stamped’.āThe man preferred getting more money net of tax despite not having employee benefits of paid holiday, sick pay, etc.āThe client preferred the flexible workforce given it may have won a two-year contract needing forty computer programmers, many of whom could temporarily relocate given the higher take-home.
The Government wanted its full whack of Income Tax, Employee NI, and Employer NI so created IR35.
December 8, 2022
It would seem Victoria does not understand your question John, or the reason for it, or behind it, which is a huge worry in itself.
Cleary it would seem from the answer given, that she thinks people can change their tax status at will, and has absolutely no idea of what IR35, or self employment is, means, or does.
I do wonder how do such people get into these positions of power and control, and I also wonder who actually interviewed and employed this person, I can only guess someone equally clueless.
And politicians wonder why our economy is going down the tubes, after seeking advice from these sorts of people.
No wonder the self employed got absolutely no help or support with Covid if this is the level of competence at the treasury.
Good grief, what a fiasco.
December 8, 2022
The question I have is how many billions are we now going to pay šŗšø USA for their fracked gas instead of spending it on UK gas with UK jobs?
Ditto coal and oil. So ludicrous this government deserves to be booted out.
Keep doing the great work Sir J and hold their feet to the š„ fire!
December 8, 2022
Really the government should cut public spending to ameliorate the overseas deficit.
Buying UK gas oil and coal would mean they could spend more as thry will have more tax revenues. Simples
December 8, 2022
‘Estimates’, in other words Gobbledegook?
December 8, 2022
The Chancellor claimed that abandoning the IR35 changes would have cost Ā£2 billion in tax revenue. You would have thought they would have done some analysis to justify this figure.
The table in your answer does not contain any data about the self-employed. Surely, Victoria Atkins is misleading the House with her answer?
The result of the IR35 tax changes is the people involved do not know if they are self employed or not. You can have a legally binding self-employed contract whilst taxed as an employee at the same time (zero rights employee). When you get the figures, you need to know how the ONS defines these people.
December 8, 2022
Sir Humpfrey is adept at telling MPs to Foxtrot Oscar.
December 8, 2022
In an ironic twist, I find it easier and less risky to get contract work in Europe and the Middle East than I do in the U.K. The UAE and Qatar have lots of project management and technical delivery roles available. But contracting overseas means I donāt have to charge VAT for my companyās services.
The U.K. seems to be a hostile business environment for skilled workers and contractors at the moment. If I can get an outside IR35 role (Iāve not looked for 6 months, but they seem to becoming rather rare), HMRC can then determine the contract should, in their view, have been inside, and I owe them more tax. Or the āpreferredā umbrella company Iāve been asked to use is running a tax evasion scam unbeknownst to me, yet I am on the hook for the unpaid tax.
If you want to grow the economy, get rid of IR35. Otherwise the U.K. will end up in the situation where is is cheaper to get foreign companies to work in the U.K., and for U.K. workers to work overseas.
December 8, 2022
John, a big problem is your government awards contracts just to big players, even when small businesses have jumped through all your hoops on ISOs, policies etc. Small businesses are being strangled from the top. Innovation will eventually start to staff, and prices will rise, just as the supermarkets snuffed out all their small family-owned shop competitors. If those large concerns aren’t, British corporation tax will drop too. It is a choice Labour started, and it was followed by the Conservatives.
I’d be interested in how many self-employed workers that were eligible for SEISS 2020/21 survived this 2021/22 tax year and submitted returns. They got SEISS as a % of the taxed income they’d declared for the previous 3 years, if my memory serves me, so they were going concerns.
December 8, 2022
Innovation will start to ‘stall’ (sorry predictive text)
December 8, 2022
The question asked āhow many?ā
Victoria Atkins gave a daft reply, not an answer.
If you asked her many ears she has, her āanswerā might be:
āONS figures for the UK including hearing aids is 1.02 left ears and 1.07 right. The data excludes those with long hair, balaclavas and dog-eared documents.ā
December 8, 2022
Another none answer. Why have Ministers that do not have a grip on their Department, why does Parliament allow such ineptitude?
Government and Parliament is not doing its job and is talking itself out of a job.
December 8, 2022
It is SMEās and the self employed that create tomorrow, discourage it and you destroy everyone’s future,
December 8, 2022
The Government through lack of ability to actually manage, is being forced into daily āfirefightingā. They do not have a grip on their own brief, they are just responding to situations that they themselves have created.
In simple terms a capable UK can ride out and prosper any storm thrown at it, it just requires a little bit of interest from Government in the economy. Government needs to understand, really understand that trust in the people is more important than their own āegosā.
December 8, 2022
Another brush off
If you canāt get a straight answer from your own party of government how do you think we feel?
The divide between them and us gets bigger everyday
December 8, 2022
Another classic ministerial effort to not answer the question !
They must regard non-answers as a measure of success !
IR35 is a real drag on people trying to make a living, in the same way as the furthcoming quarterly reporting of turnover for self-employed people. That will achieve precisely nothing but will cost all of us that have to do it accountancy fees or a subscription to QUickbooks or similar.
December 8, 2022
This Government puts no value on the risks undertaken by the self-employed, shareholders, landlords, etc. They tax income without taking into account overall losses. I’m getting to the stage where I might as well sell up and put my money into a savings account. Why bother working hard when those sitting at home doing nothing end up better off? This Government seems to be on a witch hunt against anyone who aspires to be successful.
December 8, 2022
Our whole economic system does not encourage individual initiative . Things have to change drastically ( starting at the top ) for entrepreneurial talent to emerge and for its results to make sense ; at the moment this is not happening . In 1961 I switched from my career in Education to a professional business occupation and , after 2 years , set up my own consultancy organisation . World markets were changing and expanding at the time and were not held back by degrees of borrowing and financial controls . Things are stifled up today . I despair at the lack of spirit here and in the wider world . Sir John is one of the few who preaches how things ought to change and he needs much more wider support .